Many professionals know there are companies out there that aid associations with important tasks, such as tracking donations or planning events. Yet few realize that what those companies are practicing is association management (AM).
Let’s give the matter the attention it deserves once and for all. This article details what association management is, why it’s gained such popularity, and how to get a ticket to AM paradise.
What Is Association Management?
For this article, we will treat an ‘association’ as a group of individuals with aligned interests and goals and will particularly focus on homeowner associations (HOAs) and condo owner associations (COAs), with aligned residential priorities. Many of these organizations provide benefits to their members, such as event management or financial planning.
Inherently, an association is made up of members who must pay fees to help maintain the organization and to provide important benefits, such as access to shared spaces, up-to-date online portals, and more. A lot of behind-the-scenes work goes into these productions. Associations have staff who keep track of fees, plan fundraisers, negotiate with partnering companies, and maintain communications with members.
The role of Association Management (AM), then, is to streamline and organize all of these tasks. The more efficient an association is, the more effective it will be at providing benefits to its members.
Association Management eliminates or relieves a good number of the obstacles most organizations face. Some examples of regular tasks AM addresses include:
- Sending notices for members’ dues
- Scheduling and organizing events
- Balancing finances
- Tracking budgets
- Engaging in risk management
- Recruiting new members
The variety of management requirements encompasses not only the daily tasks that keep the association running smoothly, but also more intricate and tailored needs.
So What Is an Association Management Company?
An association management company (AMC) provides AM services for associations looking to minimize costs by limiting the size of their internal team.
These companies are made up of professionals who are trained to assist associations with the daily and sporadic needs of running an HOA/COA. AMCs provide basic services that fulfill needs shared across most associations as well as specialized services that meet a client’s specific needs. Often, a single AMC will assist several associations at one time. Make sure when selecting an AMC that it will be able to give your group the full attention you require.
Types of Services
Generally, AMCs offer two types of services: full-service and outsourced services. There are benefits to each, depending on your association’s needs and priorities.
Think of the full-service option as the plan that covers an organization’s basic needs. These include all tasks ensuring the association’s services and other offerings are ready for an event as well as daily operations.
- Hiring and HR
- Equipment purchasing or rentals
- Policy development
- Budgeting plans
These operations help an HOA grow without drastically increasing its overhead. AMCs help their clients achieve their goals by keeping them organized and efficient.
Outsourced services are the additional needs that may not fit into the regular tasks most organizations need to run smoothly.
These services provide bespoke support, such as:
- Contracting for landscaping, repairs, or other improvement work
- Special event planning
- Meeting coordination
The added choices allow associations to outsource services from professionals at AMCs that would otherwise only be possible with entire internal teams and months of strategic planning.
Many people may wonder what all the fuss is about. Don’t these companies just do what committees and board members already focus on?
In some ways, they do, but with several very big differences and incentives.
By far one of the best advantages of an AMC is that HOAs/COAs are financially stronger. In 2015, this advantage took center-stage when the AMC Institute released a study demonstrating the associations with AMCs financial performance compared to those without them. They found these associations enjoy 317% more net asset growth and 31% higher revenue growth. Associations can expect to save anywhere from 25% to 40% if they hire an association management company.
In addition to this growth, associations enjoy access to expertise without the cost of hiring teams. Also, talent that otherwise wouldn’t be available to smaller organizations is made possible through AMCs.
It’s difficult to maintain accurate and current member information, let alone keep track of everything else an HOA/COA needs to continue succeeding.
AMCs help in this regard, too, as they allow associations the ability to not spend so much time on the mundane tasks that keep the organization afloat. Instead, boards can turn their attention to larger matters that ensure the HOA/COA’s success.
With success comes growth. While growth is, of course, desirable, it does come with higher expectations, more demands, and less leeway.
However, growth doesn’t have to come at the cost of member dissatisfaction or financial hardship. AMCs offer services that ensure resources and budgets are optimized, allowing associations to focus their efforts on more important matters.
How They Work
Typically, full-service AMCs operate on a basic management fee model, usually charged monthly.
The cost of working with an AMC will depend on many factors including the size of your organization, the comprehensiveness of your package, and the complexity of your business model.
The cost of outsourced services tends to either follow a basic hourly rate or project fee structure.
Hourly rates are useful when a project’s cost is difficult to determine upfront. This way, association executives can limit the hours worked by the AMC professionals to minimize ballooning costs. On the other hand, project fees are agreed upon beforehand and add value as they take into consideration the duration and complexity of a project as well as the expertise needed to complete it, allowing for transparent budgeting from the start.
Technological advances have made it easier than ever for associations to manage data. According to Robert McCuller, president and CEO of CINC Software, “New cloud-based association management software allows small businesses to manage their company without the expenses associated with hiring a traditional AMC.”
This software lets organizations interact with and track everything from finances to property management on one platform, making it convenient to streamline tasks.
Cloud platforms also offer control to associations and entrepreneurs, allowing them to stay on top of what is occurring within their organization. Further, association management software offers the following advantages:
- Increased speed of IT service delivery
- Flexibility in a rapidly-fluctuating HOA/COA environment
- Real-time information for members and employees
- Improved member relations
These platforms are ideal for companies that have teams of experts who can handle many of the tasks AMCs offer, such as negotiations. They also allow organizations to reserve funding for outsourced services and control basic services themselves.
How to Find the Right AMC
It’s obvious why organizations are jumping aboard the association management train; it offers flexibility, security, and savings for organizations that want to focus on building aspects of their operations that really matter.
Of course, not all AMCs are created equal. Finding the right one for you requires a small amount of homework and a clear understanding of your association’s requirements.
The best way to begin your journey is to decide what type of service you need. Organizations that want professionals to handle all the nuts and bolts should consider a traditional AMC, especially the full-service option.
Associations that require services intermittently, such as an HOA that hosts just one large event annually, might consider hiring an AMC specifically for outsourced services, but using software otherwise. This second option is also viable for board members who want to maintain full control over proprietary data.
To find the perfect fit, first analyze your organization’s strengths and skill gaps. Then, search for AMCs or software that offer the services that best fit your team’s particular needs.
Before signing on, be sure to check the company’s certifications and accreditations to verify it offers reliable expertise. Compare the results from multiple companies and interview the ones you believe could be a good match. When interviewing, make sure the representatives have a thorough comprehension of your association’s mission and values.
So What Is the Deal Anyway?
The deal with association management is that it is a great deal. Companies that choose to work with AMCs or use AM software enjoy perks that ease organizational management, ultimately benefiting from additional revenue and growth.
If you haven’t considered association management for your organization, now is the time to purchase a ticket to the AM train. It may just take you and your team somewhere splendid.